Posted on 07/25/2018 7:16:54 PM PDT by Red Steel
Non-Chinese buyers cash on American supplies to feed demand in their own countries, analysts say
Who’s winning the US-China trade war? When it comes to soybeans, the answer is Brazil. The South American nation is capitalising on the strife caused by US President Donald Trump’s trade war to profit from both China and America in soybean trade.
China has been the biggest buyer of US soybean in recent years, but as imports have become caught up in Beijing and Washington’s tit-for-tat tariffs, Chinese purchasers are now looking to to Brazil to make up the shortfall.
As a result, US soybean prices have fallen by 20 per cent since April to their lowest price in nearly a decade, while the Brazilian crop is being sold at a premium, according to industry watchers.
At the same time, Brazil and Argentina, another major soybean grower, have snapped up some of the cheap US supplies for their domestic markets, according to Grant Kimberley from the Iowa Soybean Association.
“There have been purchases from Brazil and Argentina to back fill their own domestic industries,” he said.
It’s not just Brazil that’s buying the surplus American soybeans, however; US sellers have also reported unusually high sales in non-traditional markets across Europe, the Middle East and Southeast Asia.
“In the end, the beans are going to move someplace, it’s just question of at what price,” he said. “It’s like a big game of musical chairs, but it’s not something you would draw up in an economics class as a model of efficiency, that’s for sure.” China’s soybean imports forecast to fall as tariffs hit and buyers switch to other animal feed
China, which imports 60 per cent of the soybeans traded worldwide, bought 32.9 million tonnes from the US last year, accounting for 34 per cent of total purchases.
That total is forecast to drop by 6.8 million tonnes for the 2018/19 crop year, according to the US Department of Agriculture.
In contrast, Brazil’s exports to China were on the rise, increasing to 8.2 million tonnes in June from 6.6 million tonnes at the same time last year, said Arlan Suderman, chief commodities economist for New York-based commodity trading and risk management services provider INTL FCStone.
Suderman said Brazilian soybean was about 20 per cent more expensive than the US product and Chinese processors would have to decide whether to pass the extra cost on to consumers.
“They will have to either absorb the increased cost, pass them along to the livestock producers utilising the soy meal and food companies utilising the soy oil, be subsidised by the government, or some combination. In the end, the Chinese crush and livestock industries are paying a steep price,” he said. Why China can’t count on Brazil to fill the soybean gap in its trade battle with the US
US farmers are also worried about the upcoming harvest. Chinese buyers have accounted for just 17 per cent of all advanced purchases of the autumn US soybean crop, down from an average of 60 per cent over the past decade, according to Reuters.
“With each day, we’re that much closer to the combines rolling, and the longer this goes, the more anxiety will intensify,” Iowa Soybean Association spokesman Aaron Putze said.
“Although the clock is ticking, the prevailing sense among farmers is that this is going to get worked out. But [the administration of US President Donald Trump] is a different kind of administration, that is not conventional, and so people are biding their time.” How the China-US trade row might pave the way for the soybean Silk Road
US soybean exporters say while they did not expect a resolution in the near future, both US sellers and their Chinese buyers were eager to get back to business.
“Our Chinese partners have told us they are hopeful that this gets resolved in a reasonable period of time, and that they want to resume normal trading, but their hands are tied too,” Kimberley said.
“This is a government-to-government, and a political issue, that is out of everyone’s hands.”
The average age of farmers keeps advancing upwards. In 20 years their ranks members will be way past retirement age.
Switch to a different crop, or another job. Farmers have had it great for far too long with gov help since great depression.
I’ve noticed we may have hit peak bacon prices.
Good thing President Trump doesn’t view it like that....
He should.
A farmer calls it quits and it's a national tragedy. 3,000 factory workers loose their jobs and nobody says a word.
There’s only so many soybeans and you can’t instantly grow more, so China had to pay Brazil a premium to replace those they were getting from us. China loves soybeans and can only grow 10% of its needs, so they will cave, just a question of when.
I don’t mind soy lecithin, but soy protein or sterols are not wise for men.
Wow. Spoken like a man whose never got his hands dirty.
[“They (China) will have to either absorb the increased cost,]
I’m sure their government will subsidize the difference. Either way, China is taking a substantial hit in price.
Exactly
{Business pressholes never talk about that... }
That word is a blast from the past here. LOL
Agriculture gets more direct and indirect (direct aid, credits, and food stamps) subsidies than all other industries combined.
Where was your concern when our manufacturing textile jobs in the carolinas ALL got shipped out to China in the last 20 years?
“There’s only so many soybeans and you can’t instantly grow more, so China had to pay Brazil a premium to replace those they were getting from us. China loves soybeans and can only grow 10% of its needs, so they will cave, just a question of when.”
That seems to me to be the operative question. Just what is the world’s supply of soybeans and can it survive without the US production? I guess you have to expect another one of the world’s truly $hit hole countries, Brazil, to try and cash in instead of helping to fix the nonsense in the world trade business.
“There’s only so many soybeans and you can’t instantly grow more, so China had to pay Brazil a premium to replace those they were getting from us. China loves soybeans and can only grow 10% of its needs, so they will cave, just a question of when.”
I just checked Worldwide soybean production:
the US produces 52% of the total .
Here are the players:
Ukraine (3.9 million metric tons) ...
Canada (6.0 million metric tons) ...
Paraguay (10.0 million metric tons) ...
India (10.5 million metric tons) ...
China (12.2 million metric tons) ...
Argentina (53.4 million metric tons) ...
Brazil (86.8 million metric tons) ...
USA (108.0 million metric tons)
So the question is, can the world afford not to buy soybeans from the US?
.
Nobody really needs soybeans; they are unhealthy to consume unless their protein is fermented, as in soy sauce.
Their oil is somewhat carcinogenic due to the phyto-estrogen it contains.
I don’t care what kind of food or goods comes from other countries...wherever it is from, soybeans to watermelons, from gloves to boots, but mostly any kind of fruit or vegetable...AMERICA MAKES IT BETTER.
That is not just an ad. it is the TRUTH.
Oh really? The world begs to differ. Anyway, that's not germane to the current discussion. The world consumes megatons of the stuff, healthy or not.
FTFY.
Building materials
Upholstery
Biodiesel
Cooking oil
Mechanical lubricants
Livestock feed
Paint products
Human consumption
To name a few uses for the lowly soybean.
The market will settle out.
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